HR-V reignited Honda in Australia but Civic expected to pick up the pace

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HONDA Australia has its sights set on 25 per cent sales growth by the end of next year and is relying heavily on its 10th-generation Civic small car – the first pre-production examples of which have landed ahead of its June launch – to return the brand to the 50,000-unit mark.

The company has struggled in recent years, impacted by product lines that have failed to hit the mark with consumers as well as aggressive competition from its Korean, European and Japanese counterparts.

While last year’s launch of the HR-V crossover marked a turnaround in terms of its sales volume, business at dealerships and, to a certain extent, brand perception, Honda – which posted 40,100 sales in 2015 – is pinning its hopes for further growth on the new-generation Civic.

Speaking with journalists at a special viewing of the new sedan at Yarra Honda in Melbourne’s inner-north this week, Honda Australia director Stephen Collins said the company would finish 2016 in a similar position to last year and added that it would be a year of consolidation.

“This year we are planning to sell 40,000 cars, the same volume we did in 2015,” he said. “For us it is a year of volume consolidation. I think there is going to be two distinct halves. The first half of the year, we basically have no old Civics left.

“We are selling strongly with HR-V. We are currently selling about 1000 HR-Vs a month, our private market share in that market is about 14 per cent, (and) we are very happy with HR-V. That car was a strong signal of us getting our mojo back. Civic is the next phase of that recovery.

“We expect that next year we will grow our volume to 50,000 units and we expect much off that will be on the back of Civic.” Mr Collins said the car-maker would no longer set unrealistic sales targets – it had previously targeted a return to at least 60,000 annual sales by this stage – and that the focus going forward would be on sustainable growth.

“What we are not going to do is set pie-in-the-sky, unrealistic sales numbers. I think that we still want to keep growing but keep growing sustainably. What I see coming through is the product to do that,” he said.

“We are not saying that we are going to grow to 80,000 or 100,000 at this point in time. Sustainability is important for us and the dealer network. We are not chasing aggressive unrealistic volume growth because it becomes a rollercoaster and we are not going to get on that rollercoaster.” Honda outlined the launch plan for the new Civic, with the hatch arriving in showrooms in June, followed by the sedan in the first half of 2017 and then the Type R hot hatch in the second half of next year.

There will be five specification levels on offer in both sedan and hatch guise including a new RS model (pictured) that will be a mid-range offering with sporty looks and powered by Honda’s new 1.5-litre turbocharged petrol engine matched with its new ‘Earth Dreams’ continuously variable transmission (CVT).

A revised version of Honda’s 1.8–litre naturally aspirated four-cylinder petrol engine will be offered in some versions, also matched with the new CVT.

The other variants, full specification and pricing remain under wraps until closer to launch, but Mr Collins said the new-generation model would not be discounted to compete with offerings in the lower end of the small-car segment.

“Mazda is a good example where you don’t have to be at $19,990 to sell plenty of cars,” he said. “Clearly we need to be competitive and we will be on price. In that $19,990 space our small sedan is the City. That market is quite small.

“Similarly with what we have done with Jazz at $16,990, similarly to what we have done with HR-V we were at $26,990, we will take a similar pricing strategy with Civic so we will make it competitive but it won’t be $19,990.” Mr Collins said Honda was not expecting to “knock off the Mazda3 or Corolla” from the top of the small-car segment, but anticipates getting “back amongst the leadership-type positions” when it launches. He added that Honda mostly sells in the private market and would not pursue large discount fleet contracts or rental deals.

While the sedan and hatch will be sourced from a new factory in Thailand, it is unclear where the Type R will be built.

The hatch was set to arrive earlier, but Mr Collins cited “development issues” as the reason behind the delay.

Despite the adoption of the so-called “One Civic Strategy” – the hatch and sedan are essentially twins with different body types for the first time in several generations of the car – there were separate development teams working on the hatch, sedan and Type R.

Mr Collins said development of the new model – which has been benchmarked against high-end European offerings – started about four months after the launch of the current model and that Honda Australia has been involved from the start.

The car-maker even sent a delegation of Australian dealers to Japan during development to give feedback on the design and other elements.

“From day one, our requirement … was a reflection of what dealers were saying to us: number one, we needed this car to be more sporty, more dynamic to appeal to younger buyers in particular.

“Secondly, we needed tech in the car – turbo engines, latest and greatest in connectivity, new CVT. Thirdly … we needed it to be fun to drive.” Yarra Honda and Eastern Honda dealer principal Tony Jowett was part of the delegation and praised the car-maker for involving dealers in the development process.

“I have been with brand for a long time,” he said. “For the first time ever Honda Australia has engaged their dealer network and dealer council and selected invitees to really be involved in this car and obviously the trip to Tokyo was an example of that.

“To be given access to see what we saw was quite refreshing and really quite encouraging too from a dealer perspective with investment.” The Civic will offer only petrol engine variants, with Honda not offering diesel following the low take-up in the current model.

A hybrid is not on the cards either, despite Honda Motor Company president and CEO Takahiro Hachigo last month announcing plans to ensure two-thirds of its line-up is electrified by 2030.

Honda Australia has discontinued a number of hybrid offerings in recent years – the CR-Z sportscar, Insight hatch, Civic Hybrid and Jazz Hybrid – after slow sales and Mr Collins said the company will likely phase out the recently launched Accord Sport Hybrid in time for the same reason.